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the robbos

Median house price

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Just reading in the paper this weekend that the median house price in one of brissy's suburbs was 640,000. How can the aussies afford these house prices when salarys seem to be 60,000 - 80,000, (really rough estimate on the figures)?

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Guest migration angel

Hi Robbos,

 

As you quite rightly point out the cost of housing means a lot of people are priced right out of the market and have to rent.

Here in Perth the medians range from in the $400K's to over $3milllion!

Obviously those in the higher income bracket can afford to live closer to the city, beach and river in the more affluent areas. That's typically what happens.

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Hi Robbos,

 

As you quite rightly point out the cost of housing means a lot of people are priced right out of the market and have to rent.

Here in Perth the medians range from in the $400K's to over $3milllion!

Obviously those in the higher income bracket can afford to live closer to the city, beach and river in the more affluent areas. That's typically what happens.

 

Median is the average suggest Perth is about 600 , qland is far more cheaper than Perth


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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Just reading in the paper this weekend that the median house price in one of brissy's suburbs was 640,000. How can the aussies afford these house prices when salarys seem to be 60,000 - 80,000, (really rough estimate on the figures)?

 

Three reasons:

 

1. Usually older people who already have money from buying and selling a previous house or two buy them at these prices so do not need a huge mortgage to cover the cost.

 

2. These older people generally might have a higher personal income than the income you quoted (eg For a lot of graduates that income is in the recently graduated range. People with their own business may earn significantly more than your income range).

 

3. A lot of people also have a second income with their partner.

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Guest Guest31881
Just reading in the paper this weekend that the median house price in one of brissy's suburbs was 640,000. How can the aussies afford these house prices when salarys seem to be 60,000 - 80,000, (really rough estimate on the figures)?

 

 

As with most first time buyers there will be 2 incomes, so average would be 120-160,000 per houshold. They would tend to go for the lower priced housing further out from the city to get their foot on the ladder as they grow older then they would hopefully move up the ladder selling their cheaper housing to other first time buyers to start again. More or less simmilar to how it would work in the UK, some will start off in appartments and work their way into houses. But housing does seem expensive in Australia in comparison to wages.

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As with most first time buyers there will be 2 incomes, so average would be 120-160,000 per houshold. They would tend to go for the lower priced housing further out from the city to get their foot on the ladder as they grow older then they would hopefully move up the ladder selling their cheaper housing to other first time buyers to start again. More or less simmilar to how it would work in the UK, some will start off in appartments and work their way into houses. But housing does seem expensive in Australia in comparison to wages.

 

No , a lot have 2 or 3 mortgages to fund investment properties , dont trust super ,


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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No , a lot have 2 or 3 mortgages to fund investment properties , dont trust super ,

 

I can't say I blame them for not trusting super,

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The short answer is that Australian housing is very expensive.

 

I've been looking into the market, and what seems to have happened is that prices boomed in the late nineties / early noughties, much like in the UK. Prices dipped slightly last year, but emergency interest rate cuts (in response to the financial crisis) and an enlarged First Home Buyers grant reinflated the boom.

 

The question now is whether Australia will succumb to the housing downturn, or whether prices will remain high. The sentiment is that they won't, but that was also the case in 2007 in the UK...

 

As to how people can afford places, I'm guessing that it's much like the UK. Older owners purchased when prices were lower relative to income, whereas younger buyers have struggled to buy into smaller, less desirable properties, or have been priced out of the market.

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The short answer is that Australian housing is very expensive.

 

I've been looking into the market, and what seems to have happened is that prices boomed in the late nineties / early noughties, much like in the UK. Prices dipped slightly last year, but emergency interest rate cuts (in response to the financial crisis) and an enlarged First Home Buyers grant reinflated the boom.

 

The question now is whether Australia will succumb to the housing downturn, or whether prices will remain high. The sentiment is that they won't, but that was also the case in 2007 in the UK...

 

As to how people can afford places, I'm guessing that it's much like the UK. Older owners purchased when prices were lower relative to income, whereas younger buyers have struggled to buy into smaller, less desirable properties, or have been priced out of the market.

 

 

totally different , a lot of people buy investment properties and help their kids on the ladder, you are forgetting a lot of the properties in perth etc are on the coastal strip and command daft money ,well not the propertys the land , 700sqm in Cottesloe set you back 2.5 million , same inthe fashionable bit s of england


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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I can't say I blame them for not trusting super,

 

Its the greedy ones , who went for speedy growth with tiger investments instead of cash growth or a median growth ,in the recession they got hammered , but its like betting on the hoorses ,its a gamble go for it and prepare to get burned , hedge yer bets and be sensible


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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I'd agree that there are differences, Yorkshirepom, particularly the way that investment properties are treated by tax, and also the way that the country is centred on the state capitals. But I'm not convinced that they're sufficiently different to maintain prices on an upward trajectory.

 

I've seen Perth property prices, and they are scary. I visited a friend in Perth a couple of years ago, and he lived one suburb back from the sea (can't remember its name). There was a plot on the other side of the road, and that was up for somewhere between one and one and a half million dollars.

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we moved from the hills to the coast in 97 when i was looking at the houses in ocean reef they were average 270,00 to 330,00 i was in my mid thirties and most of the houses we looked at were owned by couples with / without children in their mid to late twenties , i couldnt under stand how they could afford it , [ as we both worked , had three kids ran two older cars and watched our finances etc, and here they had two expensive cars , mostly one income beautiful furniture etc .

the real estate agent said some were living beyond their means but a lot got help from their parents , especially european parents who helped them pay for the land etc .

those same houses now are from 850,000 to 1.2 million and there is a house for sale opposite me he had it on the market for 1.4 million [ its just been dropped to 1.2 million and there was people comming in droves to see it , there was a lot of poms as they parked in front of my house and you could hear their accents , the kids had british accents too so they were fresh poms , i have no idea of their financial situation , but even saying you had 600k to put down as a deposit by the time you had a arranged a mortgage for the rest and stamp duty etc it would still be a hefty debt .

saying that though my cousin baught a house in forrestfield on an acre for 700k and sold it one year and one day later for 1.038 million three hundred and thirty eight thousand profit in a year not bad work if you can get it .

my middle daughter and her boyfriend are building in butler they are going to be carrying a 320,000 mortgage after their deposit its a lot of money for a young couple to borrow and ive told them the best thing is to rent two bedrooms out to help with the mortgage for a few years ,

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we moved from the hills to the coast in 97 when i was looking at the houses in ocean reef they were average 270,00 to 330,00 i was in my mid thirties and most of the houses we looked at were owned by couples with / without children in their mid to late twenties , i couldnt under stand how they could afford it , [ as we both worked , had three kids ran two older cars and watched our finances etc, and here they had two expensive cars , mostly one income beautiful furniture etc .

the real estate agent said some were living beyond their means but a lot got help from their parents , especially european parents who helped them pay for the land etc .

those same houses now are from 850,000 to 1.2 million and there is a house for sale opposite me he had it on the market for 1.4 million [ its just been dropped to 1.2 million and there was people comming in droves to see it , there was a lot of poms as they parked in front of my house and you could hear their accents , the kids had british accents too so they were fresh poms , i have no idea of their financial situation , but even saying you had 600k to put down as a deposit by the time you had a arranged a mortgage for the rest and stamp duty etc it would still be a hefty debt .

saying that though my cousin baught a house in forrestfield on an acre for 700k and sold it one year and one day later for 1.038 million three hundred and thirty eight thousand profit in a year not bad work if you can get it .

my middle daughter and her boyfriend are building in butler they are going to be carrying a 320,000 mortgage after their deposit its a lot of money for a young couple to borrow and ive told them the best thing is to rent two bedrooms out to help with the mortgage for a few years ,

 

Same as the uk as in the valuatins over 10 years , but in wa they think everybody is o minig money , nlook at prices in karratha:shocked:


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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The prices have been high in karratha for a long time , and you get very little for your money

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We've just bought in Yanchep, to build on, its relatively cheap as its still being developed and is obviously some way from the City. We were committed to getting on the housing market this year as prices will go up 10% next year. All the new build companies will review and increase their property values in the New Year, you can bet on that. The demand outstrips the supply massively in Perth hence inflated values. Doesn't put people off coming so prices only go one way.

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Guest shark

what goes up ,comes down .in Ireland they thought that house prices were never going to full ,my house was worth 650000 euros two yrs ago, today i would be lucky to get 300000 for it.The was a developer you paid 22 million for 4 h of land and it is worth 60000 today, just look in dubui , oil rich loads of money , i thought. they are now looking for money to bail them out .so do not thing it will not happen in oz.it will happen.

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houses have been correcting them selves price wise for the last two years , some people have brought and sold in that time and have been lucky to break even and in some cases taken a loss , the worst hit being the first time home owners ,

if the house is over priced it wont sell people arnt stupid they do their home work and have a good idea of what prices are in given areas .

i dont think your going to see a 600k house here going for 300k they wouldnt be able to cover the mortgage owing and unlike some countries you cant hand in your keys here and walk away from the mortgage , you would still be resposible for any difference in finances owing , and have to find that money in a short period of time , i thought it used to be five years to pay the balance of money , it may have changed now .

rents are still going up and i dont think your going to see them go down in the near future , there is no where near enough state housing here its terrible to see old age pensioners trying to find and afford private rentals , then you have the kids who have left home and sharing a house , plus young families , then people moving here from over seas , also over seas students all of which are creating a tight rental market.

even if house prices only go up 3 to 5% a year its going in the right direction , at the end of the day some ones got to own the house people are living in either buying your house your self or renting from an invester, and going on past history if houses drop mom and dad investers buy into the market which tends to push it back up again

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Guest siamsusie

 

Same as the uk as in the valuatins over 10 years , but in wa they think everybody is o minig money , nlook at prices in karratha:shocked:
Yes exactly, 4 years ago Mally, our home was valued here at 300,000 today 800,000 and believe me it is not special. The cyclone bars at the windows must be gold plated!:mad: Susie

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Guest siamsusie

 

The prices have been high in karratha for a long time , and you get very little for your money
It's land release Moirclan, and of course the demand is there and companies are prepared to pay for it unfortunately.

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what goes up ,comes down .in Ireland they thought that house prices were never going to full ,my house was worth 650000 euros two yrs ago, today i would be lucky to get 300000 for it.The was a developer you paid 22 million for 4 h of land and it is worth 60000 today, just look in dubui , oil rich loads of money , i thought. they are now looking for money to bail them out .so do not thing it will not happen in oz.it will happen.

 

The correction won't necessarily happen with a huge drop just because it happened that way in Ireland.

 

The last two recessions in Australia have seen modest price drops and then a long period of small or no increases which gave wages a chance to catch up to house prices.

 

It "could" happen that way again.

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There are several ways in which house prices could correct to more historically typical levels:

 

  • A rapid fall, as has happened in Ireland, the US and other countries. (It was happening in the UK, only it seems to have gone into reverse...)
  • Stagnant prices over the long term. If wage inflation runs at 3 - 4% then it could take 15 - 20 years.
  • High inflation that increases wages in a short space of time.

 

If inflation remains low, or we see persistent deflation, then I'd expect steep falls at some point. If it rises then stagnation of prices, or small movements in either direction.

 

Of course, just to prove me wrong, house prices will shoot up at double the rate of wage inflation for the rest of my life. :laugh:

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There are several ways in which house prices could correct to more historically typical levels:

 

  • A rapid fall, as has happened in Ireland, the US and other countries. (It was happening in the UK, only it seems to have gone into reverse...)

  • Stagnant prices over the long term. If wage inflation runs at 3 - 4% then it could take 15 - 20 years.

  • High inflation that increases wages in a short space of time.

 

If inflation remains low, or we see persistent deflation, then I'd expect steep falls at some point. If it rises then stagnation of prices, or small movements in either direction.

 

Of course, just to prove me wrong, house prices will shoot up at double the rate of wage inflation for the rest of my life. :laugh:

 

Agreed. Salary/house price disparity has options. This is what surprises me when people are so positive it will happen via option 1. Maybe they are just trying to prove the point that it will correct sometime, and only know about option 1 so assume this is how it must happen? Or maybe they do know more than the rest of us to back up their 110% certainty it has to happen via a house price crash?

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I'd guess that the first option (market crash) is the most likely, with the third as being a distinct possibility if quantitative easing money feeds through into the wider economy. It could even be a combination of all of the above.

 

The other thing to bear in mind is that historically most bubbles are symmetrical. The housing market took off in the mid to late nineties, and any correction (assuming that the game hasn't changed) is going to take a while to play out.

 

As for predictions, they seem to be coloured by personal expectations. A priced out first time buyer expects big falls, whereas a property investor bases their projections on above-inflation rises.

 

My view? It's not worth buying if it's significantly cheaper to rent. When things change, I'll re-assess my situation.

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I'd guess that the first option (market crash) is the most likely, with the third as being a distinct possibility if quantitative easing money feeds through into the wider economy. It could even be a combination of all of the above.

 

The other thing to bear in mind is that historically most bubbles are symmetrical. The housing market took off in the mid to late nineties, and any correction (assuming that the game hasn't changed) is going to take a while to play out.

 

As for predictions, they seem to be coloured by personal expectations. A priced out first time buyer expects big falls, whereas a property investor bases their projections on above-inflation rises.

 

My view? It's not worth buying if it's significantly cheaper to rent. When things change, I'll re-assess my situation.

 

I think the Brisbane market really took off around 2001/2002. I'd guess option 2 as that is how it has happened last 2 times and demand indicators seem sufficiently strong to balance out negatives so running flat makes sense. Obviously history doesn't have to repeat but it's all I have to go on without factual alternatives.

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